Brands in the Middle East are unable to identify why consumers are loyal Image Credit: Shutterstock

Billion-dirham businesses across the UAE and Saudi Arabia aren’t leveraging loyalty data effectively to understand why consumers continue to buy their products, new research shows. As marketplaces fragment and businesses look to reach customers wherever they are, a significant number of household brands in the Middle East are unable to identify why consumers are loyal, putting both their relationships and profitability at risk. The startling findings are part of a new study by market researcher Forrester Consulting on behalf of Collinson, a global customer benefits and loyalty company.

Over two-thirds (64 per cent) of organisations with revenues in excess of $300 million (Dh1.1 billion) worldwide neither understand why their customers keep coming back, nor do they employ a strategy to strengthen relationships with their consumers, according to the study, which was made available to GN Focus exclusively. In general, Middle Eastern companies are ahead of their counterparts, but a few adjustments could lead to bigger wins for them.

“[Brands] are in the dark about their customers and only apply generic segmentation based on transactional behaviour or geography. This is no longer enough in an age where much importance is placed on personalisation and experience,” Sanjit Gill, General Manager of Collinson, Middle East, told GN Focus via email.

While most big-name brands already run loyalty programmes, Collinson’s contention is that they aren’t exploiting them properly, either by asking the right big data questions or by responding with personalised experiences. “It’s surprising that so many organisations globally are taking such a disjointed approach to loyalty in 2018,” Gill added. “However, from the figures it’s still clear that programme providers need to put loyalty back on track by becoming better unified in terms of their objectives, what they measure and what success looks like.”

The survey polled 635 respondents from organisations with revenues over $300 million in the retail, travel and financial services sectors. Participants were drawn from 15 countries, including the UAE, Saudi Arabia, India, the UK and nations in North America.

With their early embrace of technological innovation, Gulf nations are ahead of the curve on some fronts. Two out of five respondents (39 per cent) in the UAE and KSA confess that they fail to integrate loyalty technology with other internal systems, but that’s better than the global average of nearly half (46 per cent). Companies in the region are more adept at measuring loyalty across the entire customer journey and business operation than their peers elsewhere, the report says.

The research also reveals an overall disconnect between respondents’ business and loyalty objectives. More than half (57 per cent) of loyalty practitioners in the UAE – and 42 per cent in Saudi Arabia – admit they do not have a loyalty strategy with clearly defined business objectives and goals. Again, the global average is higher, at 68 per cent.

Regional players recognise that more remains to be done to improve brand relationships with customers. Over two-thirds of regional decision makers – 73 per cent in the UAE and 67 per cent in KSA – expect to invest more in their loyalty programmes over the next 12 months, as compared to the global average of 64 per cent.

However, for these investments to prove a success, they will need to coincide with clearly defined strategies that are aligned with core business objectives.

Gill suggests a couple of ways forward. Embracing the benefits of big data more deeply could improve consumer relationships and enhance retention rates over the longer term. Personalisation and experience can be improved by collecting the right information about customers and using it effectively. “Businesses should collect a wide range of customer profile, preference, transactional and engagement data, as well as augment this with third-party information,” he says.

In an age of choice, when customers have more power and greater expectations than ever, they want to be rewarded for their loyalty with relevant and individualised experiences. A single bad experience is enough to force a switch to a competitor or damage a brand’s reputation via social media.

As businesses are forced to cater to customers wherever they are, they must bridge the experience between the online and offline world, in order to begin to build a robust profile of customers, and work to leverage loyalty programmes across the organisation. “Many organisations don’t have a framework in place to measure loyalty in the context of overall business results,” Gill adds. “That’s not to say they aren’t measuring their loyalty strategies, but it’s often that they may not be measuring the right things and there is often a disjointed approach to loyalty across a business. By embedding loyalty consistently and coordinating insights from across business units, businesses will gain a better understanding of loyalty, a richer and 360-degree view of the customer, and vital intelligence for smarter decision making.

“Those that strike the right balance between commercial goals, value statement and fair exchange of meaningful rewards for customers’ data, will thrive in this increasingly fragmented world.”